Even the most casual observer knows that crypto had a bad year. The reasons for the industry’s tumult could fill an entire article on their own. But the Bitcoin mining sector had a particularly rough year, and this article is dedicated to cataloging all of the bad things that miners suffered. From bankruptcies and resignations to delistings and lawsuits, Bitcoin miners saw it all. Here’s a recap of the worst events from Bitcoin mining in 2022.

Bankruptcies

Bitcoin mining companies that filed for bankruptcy or were significantly affected by counterparties filing for bankruptcy was a common theme in 2022.

  • Compute North filed for bankruptcy in September 2022. According to filings, the company owed as much as $500 million to at least 200 creditors. In February, seven months before bankruptcy, the company raised $385 million.
  • Core Scientific, the largest publicly traded Bitcoin mining company, also filed for bankruptcy a few days before Christmas. The company warned of potential bankruptcy in October 2022 as its stock price plummeted. Core plans to continue mining through its bankruptcy proceedings.
  • Celsius, a prominent crypto lending platform, also saw its sizable mining unit go bankrupt just months after the team announced its plans to go public. Celsius told bankruptcy court that continuing to mine was key to its restructuring plans, but the mining unit burned $40 million during the first two weeks of bankruptcy.
  • BlockFi was another prominent crypto lending service that maintained a sizable mining unit and has filed for bankruptcy. To date, no reports have indicated that BlockFi’s mining assets, which are hosted by Blockstream, have been interrupted or taken offline.
  • Marathon is another high-profile publicly traded Bitcoin mining company, but it has not filed for bankruptcy. Marathon is on this list because of its exposure to bankrupt firms, however, to illustrate the mild contagion of mining bankruptcies. Bloomberg reported that Marathon disclosed over $80 million of exposure to now-bankrupted Compute North – not fun.
  • Argo also has not filed for bankruptcy but came dangerously close in 2022. The company even accidentally posted fully prepared bankruptcy filings on its website, which had a catastrophic effect on the company’s share price. A $100 million deal with Galaxy Digital’s mining team helped Argo avoid bankruptcy, however.

Executive resignations

2022 also saw some notable shuffling among the ranks of mining executives in both private and publicly traded companies. This list is not exhaustive, but here are a few key resignations.

  • Dave Perrill, who was CEO of Compute North and remained on its board, resigned in September before the company filed for bankruptcy.
  • Jeffrey Kirt, who led Greenidge Generation since 2021, abruptly resigned in early October 2022.
  • Whitney Gibbs, who co-founded Compass Mining, also abruptly resigned amid “setbacks and disappointments” in July 2022.
  • Emiliano Grodzki, who co-founded Bitfarms in 2017, announced his resignation three days before the end of 2022.

Delisting notices

As crypto markets crash, stock prices of crypto mining companies also crater. Most stock markets have price thresholds that companies need to keep their stock prices above otherwise delisting is a possibility. A large number of public mining companies (relative to all public mining companies) have received notices of possible desilting in the past year.

  • In August 2022, BIT Mining sought to reassure its investors after receiving a notice from the New York Stock Exchange (NYSE) about potential delisting due to minimum price standards. The company’s chairman said in a statement at the time that “it should not be concerning that our stock is currently trading at these levels,” noting a tumultuous market environment.
  • The same month, Mawson received a notice of potential delisting based on its noncompliance with minimum bid price rules.
  • In October 2022, Digithost received the same notice of potential delisting, as reported by The Block. The Nasdaq-listed company was given 180 days to regain compliance with listing rules concerning minimum share prices.
  • Greenidge Generation received a notice of potential delisting in the middle of December 2022. Per standard listing requirements, the notice stated that “the Company failed to maintain a minimum closing bid price of $1.00 per share for the prior 30 consecutive trading day period.”
  • Bitfarms received a similar notice one day after Greenidge for the same reasons of failing to maintain a minimum closing bid price of at least $1 per share. In a press release, Bitfarms said it plans to “continually monitor the bid price” and “evaluate available options to regain compliance.”
  • Canaan, a Nasdaq-listed mining hardware manufacturer, also received notice of potential delisting, but this time share prices were not relevant. Instead, the Securities and Exchange Commission flagged Canaan for potential delisting because it used an auditor whose work can’t be inspected by the U.S. audit regulator.

Mining lawsuits

When the market sours, lawsuits are abundant. The Bitcoin mining sector is no exception. Again, this list is not exhaustive but simply notes some high(er)-profile lawsuits from the past year.

  • Blockware faces a lawsuit claiming breach of contract, negligence, deceptive trade practices and fraud, which seeks at least $250,000 in damages.
  • Iris Energy faced a class-action lawsuit over the production of its mining equipment, which was withdrawn one day after the suit was filed.
  • Tennessee’s Washington County sued BrightRidge, a local mining utility, in an attempt to force its operations to shut down, which the county claims violate zoning rules.
  • Riot sued Northern Data over improper data disclosures related to the acquisition of Riot’s flagship mining facility in Texas.
  • Whinstone, Riot’s flagship mining subsidiary, counter-sued Japan’s CMO Internet in a four-year ongoing dispute and seeks $15 million of damages.
  • Core Scientific was sued for allegedly failing to disclose a series of adverse financial circumstances to shareholders and knowingly providing false information.

A new chapter begins

2022 was a horrible year for Bitcoin mining. Through it all, the Bitcoin network continued producing new blocks and overall hashrate steadily grew. But the overall landscape was grim. That the worst is behind miners seems likely but is certainly not guaranteed. Market conditions could continue to worsen and things could continue souring. But one thing is sure: whoever survives this market will be battle-hardened miners like no other.

Image by Chris Karidis via Unsplash